De La Rue sales crimped, targets further savings

Banknote maker De La Rue saw sales decline eight per cent but increased margins and has hiked its planned cost savings.

Revenues were crimped 8.0% to £483.7m in the year to March 30th, lower than the £509m expected by analysts, as paper banknote volumes folded 21% due to challenging market conditions, depressed levels of overspill from other manufacturers and contract delays.

Chief Executive Officer Tim Cobbold blamed a "historically low level" of overspill volume and admitted that previously announced delays to several important orders had seem "some" resolution but others still needed to be secured for delivery in the current year.

The Basingstoke-based group boosted its operating profit margin through its cost saving plan to keep underlying pre-tax profits stable at £59.1m, up 2.0% on the previous year due to lower finance costs.

Earnings were in line with expectations at 44.4p per share.

De La Rue held its total dividend at 42.3p after generating operating cash inflow of £40.4m, but saw net debt jump threefold to a 'modest' £76.7m.

Cobbold revealed that the group continued to make good progress in its cost reduction plan and was now targeting annual savings of £40m, £10m higher than the original target.

"We enter the new financial year with increased cost savings identified and a strong pipeline of order opportunities, more than 10% higher than at the same time last year," he said.

Cobbold added that the board remained confident of achieving an operating profit "in excess of £100m" for the current financial year.

Shares in De La Rue had fallen 1.6% to 969.8p at 08:27 on Wednesday.

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